CHITHARA SERVICE CO-OPERATIVE BANK LTD.NO.2818, vs. CENTRAL BOARD OF DIRECT TAXES

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WP(C)/6151/2022HC KeralaKLHC01013263202223 February 2022Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala, while hearing a writ petition, noted that the petitioner had already preferred an appeal (Ext.P2) before the 3rd respondent (Commissioner of Income Tax Appeal) and that this appeal was pending consideration. The Court deemed it appropriate to dispose of the writ petition by directing the Appellate Authority to consider the appeal in a time-bound manner. Accordingly, the 3rd respondent was directed to consider and pass appropriate orders on Ext.P2 expeditiously. Furthermore, the Court ordered that no coercive steps would be initiated against the petitioner pursuant to Ext.P1 penalty order until the disposal of the appeal. The issue of whether the penalty order was validly issued, considering the alleged non-consideration of the Supreme Court judgment, was not decided on merits by the High Court but was to be adjudicated by the appellate authority.

What were the facts?

The petitioner, Chithara Service Co-operative Bank Ltd., a Primary Agricultural Credit Society, received a penalty order dated 04.02.2022 (Ext.P1). The penalty was imposed because the petitioner's claim for deduction under Section 80P was rejected. The rejection was based on the ground that the petitioner did not provide evidence to satisfy the ingredients of a Primary Agricultural Credit Society as defined under the Kerala Co-operative Societies Act. The petitioner filed an appeal (Ext.P2) before the 3rd respondent, the Commissioner of Income Tax Appeal (National Faceless Appeal Centre, Delhi). The petitioner argued that the Supreme Court's judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485] was not considered by the assessing officer, despite the penalty order being issued after this judgment.

What were the issues?

1. Whether the penalty order dated 04.02.2022 (Ext.P1) was validly issued, considering the alleged non-consideration of the Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax [2021 (1) KLT 485] by the assessing officer? Assessee's contentions: The petitioner argued that the assessing officer failed to consider the binding Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, which was delivered prior to the penalty order. The petitioner contended that this omission rendered the penalty order unsustainable. Revenue's contentions: The judgment does not record any specific contentions from the revenue regarding this issue. However, the existence of the penalty order implies the revenue's position that the deduction was rightly disallowed and penalty was justified.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS WEDNESDAY, THE 23RD DAY OF FEBRUARY 2022 / 4TH PHALGUNA, 1943 WP(C) NO. 6151 OF 2022 PETITIONER: CHITHARA SERVICE CO-OPERATIVE BANK LTD.NO.2818, SERVICE CO-OPERATIVE BANK BUILDING, MAIN ROAD, CHITHARA P.O, KOLLAM - 691559, REPRESENTED BY ITS SECRETARY SUBHA C.C. BY ADVS. K.P.PRADEEP HAREESH M.R. SANAND RAMAKRISHNAN RASMI NAIR T. T.T.BIJU T.THASMI M.J.ANOOPA RESPONDENTS: 1 CENTRAL BOARD OF DIRECT TAXES DEPARTMENT OF REVENUE, MINISTRY OF FINANCE GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI - 110001, REPRESENTED BY ITS CHAIRMAN. 2 ADDITIONAL COMMISSIONER OF INCOME TAX INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI, ROOM NO.401, 2ND FLOOR, E- RAMP.JAWAHARLAL NEHRU STADIUM, DELHI - 110003. 3 COMMISSIONER OF INCOME TAX APPEAL NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI. ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL NEHRU STADIUM, DELHI - 110003. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.02.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 6151 OF 2022 2 BECHU KURIAN THOMAS, J .............................................… W.P.(C) NO. 6151 OF 2022 …........................................ Dated this the 23rd day of February, 2022

JUDGMENT Petitioner is a Primary Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969. Ext.P1 order of penalty was issued against the petitioner on 04.02.2022. In the penalty order, petitioner's claim for deduction under Section 80P was rejected on the ground that there was no evidence to show that petitioner satisfied the ingredients of the Primary Agricultural Credit Society as contemplated under the Kerala Co-operative Societies Act.

2.

While assailing the penalty order before the 3rd respondent, petitioner has sought to canvass that the judgment of the Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. Commissioner of WP(C) NO. 6151 OF 2022 3 Income Tax [2021 (1) KLT 485] was not considered by the assessing officer though the penalty order was rendered subsequent to the Supreme Court Judgment.

3.

Since the petitioner has already preferred an appeal as Ext.P2 and the same is pending consideration before the 3rd respondent, I deem it fit that this writ petition be disposed of directing the Appellate Authority to consider the appeal in a time bound manner.

4.

Accordingly, there will be a direction to the 3rd respondent to consider and pass appropriate orders on Ext.P2, as expeditiously as possible.

5.

Till the disposal of the appeal, no coercive steps shall be initiated against the petitioner pursuant to Ext.P1 penalty order. The writ petition is disposed of as above. BECHU KURIAN THOMAS JUDGE AJM

WP(C) NO. 6151 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 6151/2022 PETITIONER’S EXHIBITS : Exhibit P1 TRUE COPY OF THE PENALTY ORDER NO. ITBA/PNL/F/270A/2021-22/1039388762(1) DATED 04.02.2022 ISSUED FOR THE YEAR 2018-19 BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit P2 TRUE COPY OF THE APPEAL DATED 17.02.2022 AGAINST THE PENALTY ORDER FILED FOR THE YEAR 2018-19 BEFORE THE 3RD RESPONDENT. Exhibit P3 TRUE COPY OF THE DEMAND NOTICE NO.ITBA/PNL/S/156/2021- 22/1039385056(1) DATED 03.02.2022 IN PENALTY ORDER ISSUED FOR THE YEAR 2018-19 BY THE 2ND RESPONDENT. Exhibit P4 TRUE COPY OF THE STAY APPLICATION FILED ON 17.02.2022 AGAINST THE PENALTY ORDER BEFORE THE 3RD RESPONDENT IN EXT. P2 APPEAL. RESPONDENT’S EXHIBITS : NIL AJM //TRUE COPY// PA TO JUDGE

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